Tax deductions and employer matches for retirement plans are like that perfect shot you get when you’re hunting. Once the right time passes by there’s no way to get it back.
Letting these powerful savings tools go unused could be leaving some serious money on the table.
An IRA deduction is available for each tax year, but you can’t amend and retrieve it later. For example, $5,000 into an IRA at a 25% tax bracket results in $1250 off of your tax bill. That’s more of your money going to work for you instead of Uncle Sam.
A work plan like a 401k or SIMPLE IRA works the same way, except this time you get an employer match too!
So let’s say your employer has a SIMPLE Plan with a 3% match, and you’re putting away $100 a month, which is under that 3% mark. You put in your $100 which reduces your take-home pay by $75 (because 25 of that 100 would have gone to taxes). Then your employer contributes their $100 match which isn’t taxable to you.
You just took $75 of take home pay and turned it into $200 of retirement savings. Not a bad deal.
But remember, if you don’t use it you lose it!
Be sure to pass this on to anyone on the fence about starting to save for retirement. This is a must.
And if you’d like to see how much savings like this have grown historically, we can provide examples.
All the best,
Wesley R. Nicholson, Mike Allen and Aaron Everdyke
Securities Offered Through Commonwealth Financial Network, Member, FINRA, SIPC, a Registered Investment Advisor. Advisory Services offered through Laurel Financial Group are separate and unrelated to Commonwealth. Laurel Financial Group is a Registered Investment Advisor
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